By Paul Lewis
BBC Radio 4's Money Box
Greg Mulholland has campaigned on landbanking for many years
A Liberal Democrat MP is calling for the introduction of new laws to stop companies selling plots of agricultural land at inflated prices.
The land is sold on the hope that planning permission will be granted and the investors will make a big return.
But Greg Mulholland wants legislation to end those schemes which are "obviously a scam".
A government spokesman said a number of schemes had already been closed down under existing laws.
Mr Mulholland, Liberal Democrat MP for Leeds North West, was speaking after the Financial Services Authority (FSA) declared the UK's biggest landbanking scheme illegal.
The FSA asked the High Court to wind up the company which ran it, UK Land Investments Limited (UKLI).
Mr Mulholland told Money Box
on BBC Radio 4,
"I'm delighted that the Financial Services Authority has taken this action and is now homing in on other companies who are carrying out what is clearly an illegal as well as an immoral activity"
The FSA confirmed it was aware of 70 landbanking schemes that had sprung up since 2005.
Jonathan Phelan, head of retail enforcement at the FSA, said,
"Our action against UKLI, should serve as a warning to other companies that might be breaking the law in this way."
But Greg Mulholland called for legislation to bring about "the end of landbanking which we have seen blight so many people's lives over the last few years.
"It's time the government woke up and took action so that by 2009 or 2010 we can look back and say... it can't happen again in this country."
More than 4,500 people were persuaded by UKLI to invest £69m in small plots of land, none of which has been given planning permission.
They paid around £15,000 for each plot, some of which have been valued at a few hundred pounds.
Lee Manning, the joint administrator of UKLI and a partner with Deloitte, told the BBC,
"The company itself has very little net assets left.
"I would doubt if creditors would get more than a few pence in the pound."
A spokesman for the Department of Business, Enterprise and Regulatory Reform (BERR) said it was able to take action against such schemes under existing laws.
"Companies Investigation Branch has investigated a number of these cases and in many instances has brought proceedings to wind up the companies concerned.
"We will continue to crack down on companies which mislead the public in this way.
"Anyone approached by companies offering plots of land on the promise of future planning permission should be very wary and thoroughly question the information they are given."
BBC Radio 4's Money Box was broadcast on Saturday, 7 June 2008 at 1204 BST.